SCOTT RESULTS STARTING TO TRACK FAVOURABLY
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Scott Technology Limited (SCT) | 3:00 pm, Tuesday 7 October 2008 | SCT | 0.950 |
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7 October 2008
Listed Company Relations
New Zealand Exchange Limited
PO Box 2959
WELLINGTON
Dear Sir/Madam
SCOTT RESULTS STARTING TO TRACK FAVOURABLY
FINANCIAL RESULT FOR THE YEAR ENDED 31 AUGUST 2008
Result
The Directors of Scott Technology Limited report that the Company made a loss after tax of $818,000 on operating revenues of $25.0 million for the year ended 31 August 2008. The second half of the year produced a Group profit after tax of $18,000, compared to a loss after tax of $836,000 in the first half of the year. This year’s result compares to the previous year’s after tax surplus of $3.09 million, achieved on operating revenues of $29.2 million.
Total shareholders’ equity at 31 August 2008 was $18.8 million, compared to $17.1 million at 31 August 2007. The balance sheet remains strong with total assets of $30.2 million, an increase of $8 million from 2007, funded by $5 million of debt, an increase in working capital and equity issued as a component of the Rocklabs acquisition. Operating cash flows were positive $1.2 million and the Company had cash on hand of $1.2 million at year end.
Dividend
After paying a six cent final dividend during the year for the year ended 31 August 2007, the Directors have declared that no dividend will be paid in respect of the year ended 31 August 2008.
Working capital, including cash, will be required to fund the Company’s expected growth and return to more normal trading levels in the short to medium term.
Board Composition
Mr Graeme Marsh, the Company’s long serving Chairman and substantial shareholder, retired at the Company’s last annual meeting in December 2007. This was well signalled in advance, as was the retirement of Mr Kevin Kilpatrick who served as CEO until May 2006 and who retired from the Board in August 2008. The Company now has a small but experienced Board who are focussed firmly on the future.
Operations
The year to 31 August 2008 was one of volatility in the Company’s international markets. The United States housing crisis, which sparked the global credit crunch, directly affected the Company’s key market – the home appliance manufacturers. Another primary market for the Company, meat processing, also suffered under the strain of drought and changing fundamentals. Despite all this, the Company has been successful in securing new work and the current forward work load is now at more normal levels.
The Company’s diversification strategy implemented several years ago continued during 2008 with the successful acquisition of Rocklabs, a manufacturer and supplier of laboratory sample preparation equipment to the mining sector worldwide. The existing Scott business and Rocklabs have already been jointly working on projects which have enabled Rocklabs to offer enhanced automation solutions to its customers.
The Company continues to look for other suitable and complementary acquisition targets that will further grow the business.
Significant achievements in the second half of the year included:
A small profit after a significant loss for the first half of the year and after absorbing the cost of a number of one-offs such as redundancies which were forced on the Company by the global market conditions
Surviving the highest New Zealand dollar/United States dollar exchange rate in over 25 years
Acquisition of the Rocklabs business, with the addition of a very manageable $5 million debt on the balance sheet
The first commercial orders for automated boning room systems for the meat industry through associate company, Robotic Technologies Limited
Continuing expenditure on research and development in several aspects of the business – a key investment in the future
Near completion of the new Kaikorai Valley Road, Dunedin manufacturing facility, with design and administration staff having moved in shortly after balance date and the workshop operations to follow in late October
Maintaining a strong balance sheet and good cash flows
A good forward work position
Prospects in all markets improving
Establishment of a Eurpoean sales agency, Scott Euro Limited
A strong management team, with a clear vision and way forward
These achievements assist the Company to position itself for a much improved performance in the near future. The Directors are confident that the Company can achieve this, provided the global economic situation does not deteriorate further.
Yours faithfully
Stuart J McLauchlan Chris C Hopkins
Chairman Managing Director
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